Japanese and Singaporean Regulators Join Forces on Crypto Pilot

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On June 26, Japan’s financial regulator, the Financial Services Authority (FSA), announced a partnership with the Monetary Authority of Singapore (MAS) for joint regulation and pilot testing of cryptocurrency projects under the initiative. “Project Guardian” of the latter. Participation will be limited to observer capacity for the FSA in its current phase. Regulators wrote:

“The project aims to test the feasibility of applications of digital technologies such as asset tokenization through pilot experiments, while managing risks to financial stability and integrity. Current pilot projects of the industry include fixed income, foreign exchange, and asset and wealth management.”

Created in May 2022 by the MAS, Project Guardian seeks to test the “feasibility of asset tokenization and DeFi applications”, in accordance with current regulations. The project has four areas of focus; open and interoperable networks, trust anchors, asset tokenization and institutional-grade DeFi protocols. In a notable project of the initiative:

“DBS Bank, JP Morgan and SBI Digital Asset Holdings traded foreign exchange and government bonds against pools of cash comprising Singapore government bonds, Japanese government bonds, Japanese yen ( JPY) and the Singapore dollar (SGD).”

Meanwhile, HSBC, Marketnode and UOB have since concluded a pilot test of a blockchain structured product, while UBS is exploring the issuance of open-ended company funds on digital asset networks. Project Guardian is not the first collaboration between the FSA and MAS. In 2017, the two regulators established a common fintech cooperation framework to promote innovation in their respective markets.

The collaboration also follows a period of relaxation of crypto laws in Japan. On June 25, Cointelegraph announced that the National Tax Agency of Japan had decided to exempt token issuers from a 30% tax on unrealized capital gains. Earlier this year, Japanese Prime Minister Fumio Kishida said DAOs and NFTs could help support the government’s “Cool Japan” strategy as it explores the use of Web3.

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